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Saturday, August 31, 2013

Health insurance sector to reach US$5b by 2020

Malaysian ReserveMalaysia’s health insurance sector is expected to more than triple by 2020 to reach US$5 billion (RM16.53 billion), presenting growth opportunities for the sector, according to a new study by Roland Berger Strategy Consultants.

The study called “SEA — The New Frontiers for Health Insurers” also said that health insurance industry in South- East Asia (SEA) is expected to grow to US$24 billion by 2020 at a compound annual growth rate of 15%, four times its previously valued size of US$6 billion in 2010.

“In Malaysia, we estimate that only 20% to 30% of the target population (household with monthly disposable income of over RM3,500) for health insurance has yet to subscribe to one product,” said Roland Berger head of financial services in SEA, Philippe Chassat, in Kuala Lumpur yesterday.

As disposable incomes rise, personal health becomes a priority and the next six years will see increasingly affluent consumers in the region driving demand for health policies to pave access to more advanced healthcare, said Chassat.

The report said health expenditures in Malaysia are expected to grow at 9% per year and the figure would double to US$880 per capita by 2020 from US$379 per capita in 2010.

“While 56% of healthcare funding in Malaysia is publicly backed, rising cost of the healthcare system will trigger private insurance protection buying,” said Chassat.

The study also discovered that insurers do not enjoy as favourable a referral rating as banks, where banks have a 70% referral rating compared to 48% for insurers.

In light of this, the study said insurers need to master four key challenges to succeed, especially in stepping up their distribution channels in addition to better targeting their client segments.

Chassat said bancassurance presents growth opportunities for distribution, where 47% of the mass-affluent in Malaysia would consider buying their health insurance products at their banks.